India’s E-Retail Market Estimated To Cross $160 Billion By 2028

E-retail in India is expected to surge past $160 billion (over Rs 13 lakh crore) mark by 2028, a report released by Bain & Company in collaboration with Flipkart said on Wednesday.

The e-retail market is expected to be around $57–60 billion (Rs 4.75 lakh crore to 5 lakh crore) in 2023, with an annual shopper base of around 240 million representing an annual addition of $8–12 billion since 2020.

"Long-term fundamentals of India’s e-retail industry, including affordable data, improved logistics and fintech infrastructure and strong digital consumer ecosystems remain intact,” Bain's Innovation & Design Capability Area, Partner and Global Leader, Arpan Sheth said in a statement.

“The market is expected to rebound to 23–25% growth levels, surging beyond $160 billion by 2028," the statement said.

The e-retail market is poised to grow in the coming years, with online spending currently only 5–6% of total retail spending in India compared to the U.S. where it is 23–24% and 35% in China, indicating massive headroom for growth.

According to the report, the majority of India's retail spend (94–95%) continues to be offline, with general trade accounting for 87% of the overall retail spend.

"As GDP per capita continues to increase, especially beyond $4,000, it is expected to drive a sharp rise in online spending, as spend per shopper on discretionary products increases,” the report said.

At present per capita income is around $2,600 in the country.

The report estimates that over 60% internet users are not shopping online. "The seller ecosystem in India is also expanding rapidly, with twice as many sellers added in 2022 compared to the previous year. Around two-thirds of these new sellers came from Tier 2 and smaller cities," the report said.

More than half of the total seller base hails from 7 cities, namely Delhi NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad, and Kolkata, the report said.

The e-retail industry in India is witnessing the emergence of new business models to cater to consumer needs which include quick-commerce (Q-commerce) platforms, hyper-value commerce, inspiration-led commerce (live commerce), and fast fashion.

"Over the past year, Q-commerce orders have doubled, accounting for 40–50 per cent of India's e-grocery spend,” Bain & Company, Partner and leading member of the Consumer Products & Retail practice, Shyam Unnikrishnan said.

The hyper-value sector's share of overall e-retail grew five times between 2020 and 2022 in India, the report said.